The Social Security System Explained

in Social-security

Social Security provides social insurance to qualified individuals based on work history, number of dependents, current employment status, age and if the person is physically able to work.

President Franklin D. Roosevelt initiated the Social Security System in 1935 when the country was plagued by the Great Depression and many elderly were poverty-stricken. Roosevelt's Social Security Act gave retirees financial benefits and lump sum money was paid to his or her beneficiaries on their death.

The Social Security System works by generating funding from payroll taxes levied on the wages of every working person. The income category of the employees is the basis of the payroll tax. Taxes increase with higher income. Likewise, the employer pays in a contribution that is equal to the dollar amount that the employee must pay. You can work for yourself and still contribute and maintain your Social Security.

Social security is collected from members and is transferred to other members. Here's how it works: younger-aged employees pay into the network via payroll tax deductions. The people who are able to perform the duties of their job are expected to keep working and paying into the system for years to come. In contrast, as these active members continue to work and pay the elderly. This also applies to members with disabilities and receiving Social Security checks. Actively paying members contribute to these funds that the entitled members receive. Look at this as a continuous process of two people aiding each other.

Americans who have paid the required number of quarters are entitled to retirement, survivor and disability benefits from the Social Security System as well as pension and unemployment insurance benefits. Retirement benefits: the total amount of money that a retiring member received relative to their contributions to the retirement plan during their period of membership in the plan. Your income impacts your contribution. The retirement benefits that will be paid to an individual will directly correlate to the salary that member earns.

Disability benefits are: after five months of contributing to the system a member can apply to receive disability benefits. Security disability benefits are given to members who can prove their sustained injuries or suffered long-term health conditions, no matter what the age.

Survivor benefits: When a spouse dies, the surviving spouse gets the survivor's benefits. Based on the individual instance, a divorced spouse might have a right to get these benefits. Also, a surviving spouse caring for disabled children or minors will get benefits, too. The children's identity has to be carefully checked in this case, because of the possibility of fraud. To make sure the payments are enough, you can consider the security death index. Unemployment benefits: When someone is laid off, he or she receives a monthly pension for six months from Social Security. This assistance is intended to help tide people over while they are not able to earn a regular salary, if they are looking for work or attending school.

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Renata Lavlor has 1 articles online

Renata Lavlor writes about Insurance and other Finance & Real Estate as a staff writer for HowToDoThings.com.

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The Social Security System Explained

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This article was published on 2010/03/27